Jonathan Lane, ADM Agriculture’s head of grain trading, comments on the Wheat Market

Global markets remain on weather-watch as current conditions in the US remain favourable but talk of declining crop estimates from other key exporters continues to support values.

The US market has reached its highest level since mid-April, with recent purchases of soybean and corn by China, and rumours of additional wheat deals, adding to the positive sentiment and igniting fresh speculative buying.

The resulting surge in global prices has driven UK new crop values higher, as has a weaker pound due to ongoing Brexit talks and the release of negative economic data.

UK ex-farm sales have slowed notably over the past weeks. With the bulk of the wheat harvest still a few weeks away, delivery premiums remain supported.

Looking in more detail at some key crop estimates, weather forecasts remain favourable for the development and yield potential of US spring crops, with the corn crop entering its key pollination stage.

Russia’s agriculture ministry puts its 2020 grain crop at 122.5mln t, including 75mln t of wheat. Grain exports for the 2020/21 marketing season are projected slightly lower than a month ago at 43mln t.

The ministry has confirmed its intention to purchase 2.5-3.5mln t of grain for its new state stockpile, but says nothing will be bought before 1 July 2021.

Ukraine had harvested 6.3mln t of grain from 1.9mln ha as of 9 July, including 2.9mln t of wheat and 3.0mln t of barley. The country’s agriculture ministry is forecasting a 2020 grain crop of at least 68mln t, well below last season’s record 75.1mln t.

Strategie Grains trimmed its estimates of this season’s EU soft wheat crop to 130.3mln t, compared with its June forecast of 130.9mln t and last season’s 147.2mln t.

Germany’s 2020 wheat harvest will fall 2.6% compared with last year to 22.5mln t, according to the country’s association of farm cooperatives.

Egypt’s state buyer GASC purchased a further 114,000t of Russian wheat in its latest international tender, as the country continues to shore up its domestic harvest.

Will Ringrose, ADM Agriculture’s head of oilseeds, comments on the OSR market

Tensions between the US and China are still running high, although President Trump has indicated that he does not want to aggravate the situation any further, ruling out further sanctions on top officials for now.

China has said it will return to the US market for agricultural goods under the phase one agreement. USDA also reported further sales of 389,000mln t of soybeans this week. A phase two deal looks to be postponed for the time being.

US soybeans have recovered after Chicago closed lower on Friday following USDA’s report that raised US ending stocks and next season’s production.

Weather remains a concern with thunderstorms in the nearby forecast, but there is plenty of time for crop conditions to improve as beans are generally made in August.

Crude oil dropped back from recent highs but seem to have found a level around $40 for West Texas Intermediate. World veg oil prices were also supported by tight supplies, with palm oil leading the rally followed by soy oil.

Matif rapeseed November futures rallied €5 on the week. The EU harvest is behind its normal pace but is slowly gathering momentum. Harvest in Ukraine is also lagging with yields also below expectations.

UK prices have risen due to the weaker pound, putting farm gate values close to season highs. Over the past 48 hours sterling has seen sharp falls against most major currencies. This is due to a variety of factors, including ongoing Brexit negotiations, rumours that the Bank of England will cut interest rates below zero and worries about Chinese investment in the UK economy.

In Canada, crop conditions are said to be excellent. Canola Insight reports good/excellent figures at 72% in Saskatchewan and 76% in Alberta.

In Australia recent rains have been disappointing, with most falling in Western Australia. There is more forecast over the next eight days, so how the weather unfolds will be watched very closely.